Which federal law mandates that mortgage loan originators must be licensed and meet specific qualifications?

The SAFE Act, which stands for the Secure and Fair Enforcement for Mortgage Licensing Act, specifically mandates that mortgage loan originators are required to be licensed and to fulfill specific qualifications. This federal law was enacted to enhance consumer protection and reduce fraud in the mortgage industry by establishing a comprehensive licensing and regulatory framework for MLOs.

The SAFE Act outlines the requirements for education, testing, and background checks that mortgage loan originators must meet to obtain and maintain their licenses. It also sets forth standards for state licensing and registration processes to ensure that MLOs are qualified to operate in the mortgage market.

While the Truth in Lending Act focuses on disclosures related to the loan terms and costs, the Fair Housing Act prohibits discrimination in housing-related transactions, and the Dodd-Frank Act introduced a variety of financial sector reforms, it is the SAFE Act that specifically addresses the licensing and requirements applicable to mortgage loan originators.